MISSISSAUGA, ON, May 3, 2022
/CNW/ - Morguard Corporation ("Morguard" or the "Company")
(TSX:MRC) is pleased to announce its consolidated financial results
for the three months ended March 31,
2022.
Reporting Highlights
- Net income increased by $213.8
million to $231.7 million for
the three months ended March 31,
2022, compared to $17.9
million for the same period in 2021.
- Normalized funds from operations ("Normalized FFO") was
$42.9 million, or $3.86 per common share, for the three months
ended March 31, 2022. This represents
a decrease of $0.3 million compared
to $43.2 million for the same period
in 2021.
- Total revenue from real estate properties increased by
$11.2 million, or 5.3%, to
$222.6 million for the three months
ended March 31, 2022, compared to
$211.4 million for the same period in
2021.
- Total revenue from hotel properties increased by $5.9 million, or 26.7%, to $28.0 million for the three months ended
March 31, 2022, compared to
$22.1 million for the same period in
2021.
- Net operating income ("NOI") decreased by $6.4 million, or 7.4%, to $80.1 million for the three months ended
March 31, 2022, compared to
$86.5 million for the same period in
2021, primarily due to lower NOI from the hotel portfolio resulting
from a decrease in a provision for Canada Emergency Wage Subsidy ("CEWS"), and
lower NOI from the office portfolio as a result of a bad debt
recovery at a property recorded in 2021.
Operational and Balance Sheet Highlights
- Subsequent to March 31, 2022, the
Company entered into conditional agreements to sell two multi-suite
residential properties located in Atlanta, Georgia and Slidell, Louisiana, providing net proceeds of
$90.7 million (US$72.6 million), excluding closing costs and
after the repayment of mortgage loans secured by the
properties.
- During the quarter, the Company sold two hotels located in
Thunder Bay, Ontario, for gross
proceeds of $18.1 million, resulting
in net cash proceeds of $4.9 million
after deducting closing costs, working capital adjustments and
after the repayment of the mortgage loan secured by these
hotels.
- Rent collections from all commercial asset classes continue to
show strength with an average collection of approximately 97% in
the current quarter.
- During the quarter, occupancy was strong and consistent across
all commercial and residential asset classes, supporting the
Company's business objective of generating stable and increasing
cash flow through its diversified portfolio of real estate
assets.
- As at March 31, 2022 the
Company's total assets were $11.8
billion, compared to $11.5
billion at December 31,
2021.
Financial Highlights
For the three months
ending March 31
|
|
(in thousands of
dollars)
|
2022
|
2021
|
Revenue from real
estate properties
|
$222,593
|
$211,364
|
Revenue from hotel
properties
|
28,051
|
22,148
|
Management and advisory
fees
|
10,262
|
10,126
|
Interest and other
income
|
4,031
|
3,324
|
Total
revenue
|
$264,937
|
$246,962
|
|
|
|
Revenue from real
estate properties
|
$222,593
|
$211,364
|
Revenue from hotel
properties
|
28,051
|
22,148
|
Property operating
expenses
|
(142,750)
|
(128,948)
|
Hotel operating
expenses
|
(27,803)
|
(18,090)
|
Net operating
income
|
$80,091
|
$86,474
|
|
|
|
Net income attributable
to common shareholders
|
$206,269
|
$15,155
|
Net income per common
share – basic and diluted
|
$18.58
|
$1.37
|
|
|
|
Funds from
operations(1)
|
$41,867
|
$44,351
|
FFO per common share –
basic and diluted(1)
|
$3.77
|
$4.00
|
|
|
|
Normalized funds from
operations(1)
|
$42,871
|
$43,224
|
Normalized FFO per
common share – basic and diluted(1)
|
$3.86
|
$3.89
|
(1) Represents a
non-GAAP financial measure/ratio that does not have any
standardized meaning prescribed by IFRS and is not necessarily
comparable to similar measures presented by other reporting issuers
in similar or different industries. This measure should be
considered as supplemental in nature and not as substitutes for
related financial information prepared in accordance with
IFRS.
|
Specified Financial Measures
The Company reports its financial results in accordance with
International Financial Reporting Standards ("IFRS"). However,
this earnings release also uses specified financial measures that
are not defined by IFRS, which follow the disclosure
requirements established by National Instrument 52-112 Non-GAAP
and Other Financial Measures Disclosure for non-GAAP
financial measures. Specified financial measures are
categorized as non-GAAP financial measures, non-GAAP ratios,
and other financial measures. Additional details on specified
financial measures including supplementary financial measures,
capital management measures and total segment measures are set
outin the Company's Management's Discussion and Analysis for the
three months ended March 31, 2021 and
available on the Company's profile on SEDAR at www.sedar.com.
The following Non-GAAP financial measures do not have any
standardized meaning prescribed by IFRS and are notnecessarily
comparable to similar measures presented by other reporting issuers
in similar or different industries.These measures should be
considered as supplemental in nature and not as substitutes for
related financialinformation prepared in accordance with IFRS. The
Company's management uses these measures to aid inassessing the
Company's underlying core performance and provides these additional
measures so that investorsmay do the same. Management believes that
the non-GAAP financial measures described below, which
supplementthe IFRS measures, provide readers with a more
comprehensive understanding of management's perspective on
theCompany's operating results and performance.
A reconciliation of each non-GAAP financial measure referred to
in this earnings release is provided below.
Adjusted Net Operating Income ("Adjusted NOI")
Adjusted NOI is an important measure in evaluating the operating
performance of the Company's real estateproperties and is a key
input in determining the fair value of the Company's properties.
Adjusted NOI represents NOI(an IFRS measure) adjusted to exclude
the impact of realty taxes accounted for under IFRIC 21 as noted
below.
NOI includes the impact of realty taxes accounted for under the
International Financial Reporting InterpretationsCommittee
("IFRIC") Interpretation 21, Levies ("IFRIC 21"). IFRIC 21 states
that an entity recognizes a levy liability inaccordance with the
relevant legislation. The obligating event for realty taxes for the
U.S. municipalities in which theREIT operates is ownership of the
property on January 1 of each year
for which the tax is imposed and, as a result,the REIT records the
entire annual realty tax expense for its U.S. properties on
January 1, except for U.S.
propertiesacquired during the year in which the realty taxes are
not recorded in the year of acquisition. Adjusted NOI recordsrealty
taxes for all properties on a pro rata basis over the entire fiscal
year.
The following table provides a reconciliation of Adjusted NOI to
its closely related financial statement measurementfor the
following periods:
For the three months
ending March 31
|
|
(in thousands of
dollars)
|
2022
|
2021
|
Multi-suite
residential
|
$54,779
|
$50,749
|
Retail
|
27,398
|
28,222
|
Office
|
31,132
|
33,519
|
Industrial
|
2,120
|
1,781
|
Hotel
|
248
|
4,058
|
Adjusted
NOI
|
115,677
|
118,329
|
IFRIC 21 adjustment -
multi-suite residential
|
(31,732)
|
(27,859)
|
IFRIC 21 adjustment -
retail
|
(3,854)
|
(3,996)
|
NOI
|
$80,091
|
$86,474
|
Funds From Operations and Normalized FFO
FFO (and FFO per common share) are non-GAAP financial measures
widely used as a real estate industry standardthat supplement net
income (loss) and evaluates operating performance but is not
indicative of funds available tomeet the Company's cash
requirements. FFO can assist with comparisons of the operating
performance of theCompany's real estate between periods and
relative to other real estate entities. FFO is computed in
accordance withthe current definition of the Real Property
Association of Canada ("REALPAC")
and is defined as net income (loss)attributable to common
shareholders adjusted for: (i) deferred income taxes, (ii)
unrealized changes in the fair valueof real estate properties,
(iii) realty taxes accounted for under IFRIC 21, (iv) internal
leasing costs, (v) gains/lossesfrom the sale of real estate or
hotel property (including income tax on the sale of real estate or
hotel property), (vi)transaction costs expensed as a result of a
business combination, (vii) gains/losses on business combination,
(viii)the non-controlling interest of Morguard North American
Residential REIT, (ix) amortization of depreciable real
estateassets (including right-of-use assets), * amortization of
intangible assets, (xi) principal payments of lease
liabilities,(xii) FFO adjustments for equity-accounted investments,
(xiii) provision for impairment, (xiv) other fair valueadjustments
and non-cash items. The Company considers FFO to be a useful
measure for reviewing its comparativeoperating and financial
performance. FFO per common share is calculated as FFO divided by
the weighted averagenumber of common shares outstanding during the
period.
Normalized FFO (and normalized FFO per common share) are
computed as FFO excluding non-recurring items on anet of tax basis
and other fair value adjustments. The Company believes it is useful
to provide an analysis ofNormalized FFO which excludes
non-recurring items on a net of tax basis and other fair value
adjustments excludedfrom REALPAC's definition of FFO described
above.
The following tables provide a reconciliation of FFO and
Normalized FFO to its closely related financial statement
measurement for the following periods:
For the three months
ending March 31
|
|
(in thousands of
dollars)
|
2022
|
2021
|
Multi-suite
residential
|
$54,779
|
$50,749
|
Retail
|
27,398
|
28,222
|
Office
|
31,132
|
33,519
|
Industrial
|
2,120
|
1,781
|
Hotel
|
248
|
4,058
|
Adjusted
NOI
|
115,677
|
118,329
|
Other
Revenue
|
|
|
Management and advisory
fees
|
10,262
|
10,126
|
Interest and other
income
|
4,031
|
3,324
|
Equity-accounted
FFO
|
1,162
|
(782)
|
|
15,455
|
12,668
|
Expenses and
Other
|
|
|
Interest
|
(54,884)
|
(55,966)
|
Principal repayment of
lease liabilities
|
(376)
|
(449)
|
Property management and
corporate
|
(20,514)
|
(19,296)
|
Internal leasing
costs
|
721
|
770
|
Amortization of capital
assets
|
(391)
|
(835)
|
Current income
taxes
|
(551)
|
(832)
|
Non-controlling
interests' share of FFO
|
(14,047)
|
(14,495)
|
Unrealized changes in
the fair value of financial instruments
|
(1,358)
|
1,968
|
Other income
|
2,135
|
2,489
|
FFO
|
$41,867
|
$44,351
|
FFO per common share
amounts – basic and diluted
|
$3.77
|
$4.00
|
Weighted average number
of common shares outstanding (in thousands):
|
Basic and
diluted
|
11,101
|
11,101
|
|
|
|
|
For the three months
ending March 31
|
|
(in thousands of
dollars)
|
2022
|
2021
|
FFO (from
above)
|
$41,867
|
$44,351
|
Add/(deduct):
|
|
|
Unrealized changes in
the fair value of financial instruments
|
1,358
|
(1,968)
|
SARs plan increase in
compensation expense
|
450
|
456
|
Sears settlement, net
of non-controlling interest
|
—
|
(1,238)
|
Lease cancellation fee
and other
|
(952)
|
1,623
|
Tax effect of above
adjustments
|
148
|
—
|
Normalized
FFO
|
$42,871
|
$43,224
|
Per common share
amounts – basic and diluted
|
$3.86
|
$3.89
|
First Quarter Dividend
The Board of Directors of Morguard Corporation announced that
the second quarterly, eligible dividend of 2022 in the amount of
$0.15 per common share will be paid
on June 30, 2022, to shareholders of
record at the close of business on June 15,
2022.
Subsequent Events
Subsequent to March 31, 2022, the
Company sold a hotel property for gross proceeds of $8.7 million, excluding closing costs. The
purchase price was satisfied with cash of $5.6 million and a promissory note receivable of
$3.1 million. At closing, the Company
repaid a first mortgage loan totaling $10.1
million that was secured by the hotel.
Subsequent to March 31, 2022, the
Company completed the refinancing of a multi-suite residential
property located in West Palm Beach,
Florida, in the amount of $19.1
million (US$15.3 million) at
an interest rate of 3.89% and for a term of 10 years. The maturing
mortgage amounts to $11.3 million
(US$9.1 million), was open and
prepayable at no penalty before its scheduled maturity on
August 1, 2022, and has an interest
rate of 3.96%.
Subsequent to March 31, 2022, the
Company entered into a binding commitment letter for the
refinancing of a multi-suite residential property located in
Palm Beach County, Florida, in the
amount of $57.1 million (US$45.7 million) at an interest rate of 4.19% and
for a term of 10 years. The Company expects to close the
refinancing during the second quarter of 2022. The maturing
mortgage amounts to $29.1 million
(US$23.3 million), is open and
prepayable at no penalty before its scheduled maturity on
October 1, 2022, and has an interest
rate of 3.78%.
The Company's unaudited financial statements for the three
months ended March 31, 2022, along
with management's Discussion and Analysis will be available on the
Company's website at www.morguard.com and will be filed with SEDAR
at www.sedar.com.
About Morguard Corporation
Morguard Corporation is a real estate company, with total assets
owned and under management valued at $19.9
billion. As at May 3, 2022,
Morguard owns a diversified portfolio of 195 multi-suite
residential, retail, office, industrial and hotel properties
comprised of 17,752 residential suites, approximately 16.8 million
square feet of commercial leasable space and 4,874 hotel rooms.
Morguard also currently owns a 60.8% interest in Morguard Real
Estate Investment Trust and a 44.7% effective interest in Morguard
North American Residential Real Estate Investment Trust. Morguard
also provides advisory and management services to institutional and
other investors. For more information, visit the Company's website
at www.morguard.com.
SOURCE Morguard Corporation